Low-cost housing the victim in land sale

Jennifer Shubinski

Friday, June 4, 2004 | 10:58 a.m.

The sale of 1,940 acres for $557 million Wednesday eliminated the chance that work force housing would be incorporated in a separate 115-acre parcel bought by Kimball Hill Homes at a federal auction last year.

The news angered affordable housing advocates who said the lack of reasonably priced and entry-level homes is only going to get worse.

Inclusionary zoning, also called work force housing, is a way that municipalities mandate that houses be built and sold to people in a specified income bracket who can't otherwise afford the average home price, which in the Las Vegas Valley is $233,360 for a new home.

Henderson city officials, concerned about the huge increases in new and resale home prices began exploring the possibility of inclusionary zoning last year -- and placed a restriction that would have mandated that 10 percent of new homes built be sold at below market rate prices on two parcels -- the 1,940-acre parcel and the 115-acre parcel.

At the November 2003 Bureau of Land Management auction, both parcels went up for sale with the inclusionary zoning restriction. The 115-acre piece sold to Kimball Hill Homes, a private builder based in the Chicago area, for $28.4 million, almost 65 percent above the appraised value of $17.3 million. The larger parcel did not sell at that auction, largely because of the inclusionary zoning requirement, developers said.

Henderson city officials then retraced their work, removing the work force-housing requirement from the 1,900 acres in hopes that it would sell the second time around, and told Kimball Hill Homes that if the 1,940 acres sold at auction, the work force housing requirements would be lifted. If it didn't sell for a second time, the work force housing requirements on the Kimball Hill Homes land would remain.

"We made a deal with Kimball Hill that by (the 1,940 acres') selling, it would demonstrate that work force housing was the problem," said Bob Wilson, real property specialist with Henderson's city attorney's office property management division. "If it didn't sell, then it would show work force housing wasn't the issue."

Gail Burks, director of the Nevada Fair Housing Center, said to not include some type of affordable housing in planned development is "atrocious."

"At some point our community has to wake up and look at the impact of what we're doing to everyday working people," she said. "Affordable housing is not a dirty word."

Wilson said the inclusionary zoning ordinance was lifted not because of pressures from the development community but because the implementation of the program was not clear.

"It wasn't so much that workforce housing is a bad idea, it isn't very measurable from an accounting standpoint," he said.

The BLM has nothing to do with restrictions on the land or whether those restrictions change at a later date after the sale, said Judy Fry, BLM land sales manager.

Stan Gutshall, area vice president for land for Kimball Hill, said the company did not approach the city about removing the requirement.

"The problem with work force housing is how you mange it, how can you offer homes to some people at one price and not to others," he said. "I think the way the city of Henderson can get affordable housing for the first-time buyer is to allow a lot of the smaller more dense product that's allowed in other cities and the county."

Even without the requirement, Wilson said the Kimball Hill Homes product would fall into the price range of work force housing.

Gutshall said of the 650 attached and detached houses planned for the site, about 450 duplexes will be sold with a possible starting price in the low $200,000s. Prices of the detached houses will probably start at $350,000. Kimball Hill is about a year away from selling any homes, he said.

However, at those prices people would not be able to take part in Henderson's down payment assistance program because the homes would be too expensive, because of the Federal Housing Administration mortgage limits for the area, which is $189,800, as of April 9.

Gustavo Ramos, deputy executive director of Clark County's Housing Authority and chair of the area's Homeless Coalition, said once people are able to move out of public housing to homeownership, there is often no place for them to buy in Las Vegas.

"We can't continue to have people on public housing assistance when they get to the point where they can transition out of our housing, but if there isn't some place to send them, what are we going to do?" he said.

He said because there is no movement within the system, the waiting list for the authority's programs was closed when it reached 5,000 people.